Just in time for the seventh anniversary of the Supreme Court's 5-4 decision in Kelo v. City of New London (June 23, 2005) that said a Connecticut city could use its eminent domain power to seize Susette Kelo's house to make way for an economic development project, Senators John Cornyn and Rand Paul have introduced the Protection of Homes, Small Businesses and Private Property Act of 2012. The legislation would prevent the federal government from using its eminent domain power, and prevent state and local governments from using federal funds in support of eminent domain, in cases when the "public use" is economic development.
The "findings" section of the legislation says, "It is appropriate for Congress to take action, consistent with its limited powers under the Constitution, to restore the vital protections of the Fifth Amendment and to protect homes, small businesses, and other private property rights against unreasonable government use of the power of eminent domain."
As written the legislation does not appear to block the eminent domain underwater mortgage grab that has been covered here recently, because that plan envisions using private rather than federal funds. If Congress wanted to scuttle the mortgage plan, it might have to turn to securities law, perhaps moving to prevent companies from raising funds for such ventures under the exemptions in federal securities law that funds use to raise capital.